Hello!

I would reach out to Centurica. They have a great reputation when it comes to e-commerce DD.

https://www.centurica.com

We currently have an e-commerce company in our portfolio and I would be happy to offer some feedback. You can reach me at [redacted]

If they have a meaningful % of sales through Amazon, I would be happy to share some analytics / what to look for. You can reach me at [redacted]

My company, RightBid, produces a lot of operational due diligence for e-commerce questions for large private equity firms. For instance, we can find the average price for keywords/brands across sites and identify how the overall product mix differs site to site. If you have these sorts of questions shoot me a message or email [redacted] and I'd be happy to chat more. Thanks! Zach

You should definitely check the Organic search, paid search, and social reach and do an SEO audit. If they have a PBN(private blog network) are they giving you access?

And you could also outsource some of the due diligence to Centurica, which specializes in eCommerce due diligence.

The problem with Centurica is they look at past performance, not future prospects. They missed major changes that were in the works at Amazon and the buyer saw a devastating decline in sales right after he closed on the business, even though Centurica gave it a clean bill of health.

I have over $1 billion in e-commerce revenue under my belt. Pirates and con men sail in these waters, the best protection is knowledge and experience, mostly gained by encounters with these scoundrels costing money along the way.

E-commerce is tricky for due diligence. You have to know how you can get screwed - there are dozens of ways I can think of that a potential seller can inflate profits or traffic that can just disappear after close. There are almost certainly dozens more I have not yet encountered. They can hide marketing dollars spent in a different account greatly inflating profits, They can drive traffic via email or social media giveaways that is not replicatable and looks "natural". Rankings can change on a dime for no real reason or on a mop up of undesirable activities by Amazon, Google, Facebook etc. If you dont know how the traffic was generated in the first place the business can be dead literally overnight.

You need to have a very strong understanding of where traffic is coming from, what is driving that traffic, how much it costs, what it is reliant on, how solid those sources are and how you can replicate, strengthen or replace them.

Too many e-commerce businesses market themselves as turnkey when they really are very reliant on a specific knowledge set or are built on the back of non-repeatable and non-scalable black hat techniques. And those are the good ones.

While there are some great businesses in this space, one of the reasons they trade so cheaply is because they are inherently very risky. If you found a stock that was paying a 30% dividend you would be very concerned that you might lose your entire investment? That is basically what an e-commerce company trading at a 3.3 multiple is and thus should be approached not as a great deal but as a chance to totally get wiped out...

I have 15 years experience in the industry have grown 2 businesses in the space by more than $100 million each. I know the levers to pull, have relationships with top-notch professionals, and know where the many pitfalls lie and I am still very cautious when approaching these businesses because the vast majority are much riskier than they appear at a quick glance.

Someone without experience is probably betting on getting lucky.

Hey anonymous, happy to help. I've been running online companies for 12+ years and have done DD both internally and for PE; [redacted] (Not interested in a paying gig so no worries, I just like this stuff)

Thanks for this discussion. It is helpful as I have a non e-commerce background but have considered acquiring.

Hey, this is something I've helped with before - happy to jump on a call - [redacted]

Email me. I've owned an Ecommerce Company before. [redacted]

I've done ecom for a decade at the 9 and 10-figure sales levels, ping me at [redacted]